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4 Things Lenders Have Done Recently That Make Me Laugh

By
Real Estate Agent with The Melcher Agency

1. A husband and wife were buying a home with me. The wife wrote a check for earnest money from their joint checking account. Both their names were on the check. The husband was the primary. The wife's name was under his. Since the wife wrote the check and was not the primary on the account, the underwriter required the husband to write up a gift letter, donating the earnest money to his wife, in order to validate the funds. What a waste of time.

2. An FHA appraiser inspected a home for one of my buyers. She crawled up into the attic (first time I've ever had an FHA appraiser ever do this) and saw a bird's nest sitting next to a truss. She reported back that the financing would not be approved until the nest was removed. I thought "why didn't you just pick it up and take it down with you if it's so important?" Because of this contingency the seller, who was out of state, had to hire a vendor to go out to the home and remove the nest. Then, of course, the appraiser had to schedule a second visit out to the home to "verify" that the nest was gone. Ridiculous. This ordeal delayed my buyers' closing by three weeks.

3. Lender hadn't procured a receipt from buyer's homeowners insurance prior to closing, which really should be a big deal, but the deal won't close without it. She got on the phone and got a copy sent over. The underwriter didn't like the way it was worded. Do over. The underwriter didn't like the second one either. It said they had coverage, but it didn't explicitly say "paid". Do over. The third one also did not meet the underwriter's approval because the insurance agent had written "paid" on the receipt. The word "paid" evidently is only permissible if it's typed. The fourth receipt met the underwriters approval. This process turned a 40 minute closing into one that took almost 4 hours. The poor sellers were just sitting there. They were very gracious. So were my buyers, but NO ONE was happy.

4. We had to sign a Lead-Based Paint Disclosure verifying the home did not have lead-based paint on the property. This is a standard disclosure on homes built before 1978, but recently many lenders are requiring them on all homes, even brand new ones. The last several homes we've closed have been built 20+ years since lead-based paint was banned, but OK...what's one more disclosure going to hurt? I mean, let's just pile it on.

Moral of the story: if you're buying a home, put your seatbelt on and expect weirdness from your lender. It's not your loan officer's fault. It's not your Realtor's fault. It's just the way it is right now. They are inventing new disclosures and contingencies to financing every day. I would not be surprised if they start requiring blood samples to verify identity.

 

Mario Trejo Romero

www.talktoMario.com

 

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Comments (12)

Angelia Garcia
Pure Realtors - Dallas, TX

How ridiculous. Good thing you stuck it out and so did your clients. I will keep those items in mind.

Aug 19, 2008 11:21 AM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

I think that the government owns lots of stock in paper mills....lead based paint addendums...on new construction.,...ammendments that don't need ammending....counter out the__________ the bank underwriter doesn't want the buyer getting a 30 year loan on a book case....the fun never ends...

Aug 19, 2008 11:21 AM
Nancy Larson
I am a licensed referral agent in NJ - Hutchinson Island, FL

Interesting....underwriters are in such fear of error...that all closings might have to be done at a hotel...lol

Aug 19, 2008 11:22 AM
Adam Anderson
Northwood Realty - Pleasant Hills, PA

Hey - I don't blame these lenders for scrutinizing, but some of the things you listed above are absolutely ridiculous....especially the bird's nest and the insurance papers.  I'm sure there are some more horror stories out there.

Buckle your seat belts ladies and gentlemen - the ride's about to get a little bumpy.

Interesting read!!

Aug 19, 2008 11:23 AM
Catherine Eusea
Prospect Mortgage - Fort Collins, CO
Mortgage Lender

Most of these are stupid items....the earnest money check has become a huge issue. This issue above is more of a problem if the earnest money check is written by someone not on the loan. So if the wife wrote the check and she is not a borrower then the earnest money has to be written by only the borrower/s. The FHA inspection/appraiser...never had that issues but I have see problems with not having enough installation in the attic.

Sorry for all the issues....I wish is was easier, one hoop after another. (it's starting to make me go cookooo!) Catherine

Aug 19, 2008 11:29 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

This is what is known as the classic overkill. 

Since the mortgage mess, the lenders want to be seen as squeeky clean.

I can understand the insurance issue because they can't release the finds without proof of paid insurance.  That should have been sent about a week earlier. 

I can see that agents had better start dottind and crossing.

 

Aug 19, 2008 11:37 AM
Bill Ladewig
LoanOfficerSchool.com - Escondido, CA
Experience Is Your Advantage

I Mario, I had fun reading your blog. It is good to know someone else's underwriter is weirder than mine.

Expecting weirdness from underwriters is good advice but some of your experiences were really weird.  It sounds like you need to find another direct lender or your mortgage broker needs to find another wholesale source.  If I am reading #2 correctly the appraiser really musta fallen out of his tree.  

As to the lead paint disclosure, have your LO include it the initial application package.   My FHA app/disclosure package has grown to 30 pages.  But, once it's done it's done.

Those of us who remain in the lending industry expect a little weirdness from our underwriters in their well deserved state of paranoia; after all is said and done it is their reputations and jobs that are on the line every time they approve a loan.  That said, your stories were over the top.

Best regards, Bill Ladewig

 

 

Aug 19, 2008 11:50 AM
Ron Moore
RE/MAX Professionals/Regal Builders - Retired - Florence, SC
MOORE Thoughts

Mario, did I ever tell you about the underwriter who pulled a loan approval the day before closing because she questioned the buyer's tax return?  Seriously!  Well after a call from an attorney with the IRS, that underwriter won't make that mistake again.

Aug 19, 2008 12:06 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

I do not know which one is more ridiculous. These are the same lenders that couldn't give money away fast enough a few years ago, now, to make it worst they are doing the opposite.

I just do not get it

Anne

 

Aug 19, 2008 12:07 PM
Richard Holloman
Troop Real Estate - Simi Valley, CA

Humor and REal Estate, truely a match these days.  Either you can get angry or look at the industry laugh- solve the problem and move on.

Aug 19, 2008 12:16 PM
Patty Carroll
Vancouver, WA

It is just really frustrating and leaves a bad feeling with everyone involved. Not sure what they are thinking lately. Great Post!

Aug 19, 2008 12:31 PM
Kristin Moran
Owner - RE/MAX Access - KristinMoran@Remax.net - San Antonio, TX
San Antonio,TX - Real Estate - 210-313-7397

ARGH!  How frustrating.  I agree, all ridiculous, trivial items.  Interesting to see what else we will hear of?

Aug 19, 2008 12:59 PM